Cash-strapped eThekwini puts staff’s June salaries at risk
Kumar said the city will have only 6 days cash on hand, an equivalent of R560 million, by the end of June which will create a dilemma for the city in terms of paying salaries.
ETHEKWINI Municipality may not be able to pay staff salaries for the month of June due to the impact of the Coronavirus pandemic.
This was according to Krish Kumar, the city’s Chief Financial Officer, who was speaking during a webinar with 30 business leaders.
Kumar said the city will have only 6 days cash on hand, an equivalent of R560 million, by the end of June which will create a dilemma for the city in terms of paying salaries.
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In a slide presentation by Kumar, the city has just 44 days cash on hand before the end of the current financial year.
“Whilst we may survive the current financial year with 44 days cash on hand, it will impact on our credit rating,” said Kumar.
“The 44 days cash on hand also includes unused government grants and other statutory reserves. If these are excluded we are left with less than 6 days cash on hand. Based on this, (we) will not be able to pay salaries in June 2020,” he said.
Kumar revealed that the city has spent R597 million of its budget fighting the Coronavirus, including R92 million on the homelessness programme.
The situation has been made worse with the collection rate for April 2020 plunging to a historic low of 56 per cent instead of the normal 96 per cent average.
Kumar said they are expecting the collection rate for May to be even worse.
To counteract this, the city is considering increasing its overdraft to R1.5 billion, something Kumar said the city has never done before because they always had cash reserves.
Moses Tembe, co-chair of the KZN Growth Coalition suggested there is a false dichotomy between the economy and saving lives.
Tembe said the city needs to prioritise both short term and long term strategies to stop people slipping into unemployment and poverty in future.
“We are happy the president has allowed most industries to get back to work under level 3, but there are some regulations that still don’t make sense to us like construction operations are allowed, yet conveyancing is not,” he said.
Solly Suleman, President of Minara Chamber of Commerce, said a lack of communication to business owners was a major challenge during the lockdown.
He said many of them clashed with law officers over the interpretation of the regulations leading to many complaints.
“EThekwini will need to harness the expertise of professionals, businessmen / women, NGO’s, civil society unions, government at all levels to strategise a way forward and support each other or else there will be a meltdown,” he said.
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